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A judge on Monday dismissed the Federal Trade Commission's (FTC) antitrust lawsuit against Facebook and a separate antitrust lawsuit brought by dozens of attorneys general. Both suits alleged the social media giant is violating antitrust law by buying up competitors and depriving consumers of alternatives that would better protect their privacy.
Facebook's (FB) stock price was higher in late-afternoon trading, pushing the company's market valuation past $1 trillion for the first time.
The FTC case was dismissed without prejudice, meaning the government can file an amended antitrust suit against Facebook within the next 30 days. The states' case was dismissed in its entirety.
"Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the [FTC's] Complaint is legally insufficient and must therefore be dismissed," U.S. Judge James Boasberg of the District of Columbia wrote in Monday's opinion granting Facebook's motion to dismiss the agency's complaint.
In a separate order dismissing the states' case, Judge Boasberg reasoned that the states were barred from bringing their claim because they waited too long to file their allegations.
"... [T]he States’ long delays were unreasonable and unjustified as a matter of law. Both acquisitions were, per Plaintiffs’ allegations, publicly announced, and the States were thus aware or certainly should have been aware of them from those points onward," the judge ruled.
In dismissing the states' case, the judge also ruled that antitrust law does not stop Facebook from adopting a policy that makes it harder for competing apps to communicate with Facebook — a concept known as interoperability.
A Facebook company spokesperson told Yahoo Finance, "We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook. We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”
A spokesperson for the New York attorney general's office, which spearheaded the AGs' case, said their office is reviewing the decision and considering its legal options.
At the heart of both lawsuits are claims that Facebook’s acquisitions of Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion, as well as other smaller technology companies, were carried out in order to quash competition.
In its lawsuit, the FTC alleged that Facebook used its dominant position to quash the threats. The FTC, however, was also the entity that reviewed the transactions and allowed Facebook to make both purchases.
Despite that, the agency has also taken the social network to task. In 2019, the commission slapped Facebook with a $5 billion penalty for allowing Cambridge Analytica, a data firm conducting election research on behalf of then candidate Donald Trump’s campaign, to access private data of 87 million Facebook users. In a settlement agreement, the FTC also mandated that Facebook implement new privacy safeguards, including obtaining users' consent before sharing information beyond their privacy settings.
Critics of the FTC’s fine were underwhelmed. The $5 billion sum, they said, was nothing more than a slap on the wrist for the company that reported $70.7 billion in revenue in fiscal 2019.
On Monday, Rep. Ken Buck (R-CO), the ranking member of the House Judiciary Committee's subcommittee on antitrust, responded to news of the judge's dismissal by calling for stronger antitrust laws.
"Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed," Buck said in a statement. "Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.”
Big tech crackdown
The FTC's suit against Facebook is only one of a number of ongoing actions and investigations into Big Tech. Earlier this month, Buck and members of the House antitrust subcommittee introduced six antitrust bills that take direct aim at America's most valuable tech companies.
The bills call for curbing the ability for companies to favor their own services — think searching for video on Google (GOOG, GOOGL) and being pointed to YouTube. The proposed legislation would also prohibit companies from requiring clients to use their secondary services to use their platforms — think Amazon (AMZN) forcing third-party sellers to use its logistics platform.
Penalties for violating the bills vary from forcing companies to pay as much as 30% of their U.S. revenue during the period of the violation or 15% of the prior year’s total revenue, to requiring firms to divest entire business lines.
Google is already contending with a series of antitrust lawsuits filed by the Justice Department and attorneys general related to its advertising and search dominance. Google is also expected to be hit with an antitrust suit related to its Play Store as soon as this week.
Amazon, meanwhile, was recently struck with a suit by Washington, D.C. Attorney General Karl Racine alleging that the e-commerce giant acts as an illegal monopoly by forbidding third-party sellers from offering cheaper rates for their products on competing websites.
Apple (AAPL) is also dealing with its own antitrust issues via a lawsuit filed by Epic Games that claims the company abuses its control over the App Store. A ruling in that case is expected this summer.
Yahoo Finance has reached out to the FTC and will update this story with any response it receives.
Editor's note: This story was updated to note that the separate case by attorneys general was also dismissed.
Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.
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